Commutation Functions on LI & ME text

[100in1998]

I noticed the commutation functions listed on the Life Insurance & Modified Endowments (IRC 7702, etc) text. I have been out of the exams for a few years, but back when I took 150 (now part M-LC) I remember not needing to study commutation function. Since this is metioned in the textbook, does it automatically make it fair game again?

Also, on a side note, I'm trying to think of good practice questions that could come from this text. A question about a calculation (similar to a Non-forfeiture calculation question), or maybe a list type question of what criteria is important to include when testing for a definition of life insurance or 7-pay premium. Any other thoughts?

[wat?]

I noticed the commutation functions listed on the Life Insurance & Modified Endowments (IRC 7702, etc) text. I have been out of the exams for a few years, but back when I took 150 (now part M-LC) I remember not needing to study commutation function. Since this is metioned in the textbook, does it automatically make it fair game again?

Also, on a side note, I'm trying to think of good practice questions that could come from this text. A question about a calculation (similar to a Non-forfeiture calculation question), or maybe a list type question of what criteria is important to include when testing for a definition of life insurance or 7-pay premium. Any other thoughts?

I don't know if any good exam question could test knowledge of commutation functions just from the LIME text. If they do, they're really not hitting the meat of the subject.

I expect much more description/list type questions from the LIME text, like describe the CVAT test or the guideline premium + CV corridor test.

I could also see an application problem, where they give you a certain product and tell you it does or doesn't satisfy 7702/7702A limitations and asks you what gets added to taxable income, or how one can adjust the limitation/parameters of the policy in order to comply with the limitations.

I don't know if any questions could test the history of the 7702 limitations as covered by chapters 1-4, 6 & 9.

There were brief mentions of section 101(f), and how it led to the development of 7702 & 7702A, but I don't know if it's testable.

[100in1998]

That's the kind of questions I was also thinking about. If they throw in a commutation function question, I will write an essay response! I think it will outline how the computer age has progressed to a point where only "old actuaries" actually use them.

My boss always uses commutation functions, whereas, when I prove things, I always like to see the moving parts, so I use more of a first principles approach.

Thanks for confirming my thoughts.

[RichieGB]

If they throw in a commutation function question, I will write an essay response! I think it will outline how the computer age has progressed to a point where only "old actuaries" actually use them.


Is this what it's like at your company? I'm not saying that mine is particularly evolved, but we still use commutation functions for pricing. And I'm not an "old actuary", I've only been in the biz for two years.

[100in1998]

I'm in the financial area, so I'm not sure what we use for pricing.

[slystarnes]

Speaking of the LIME textbook, how well do you think they will expect us to know the section numbers of the IRC? (7702(e)(1)(B) is the attained age rule for example)?

[100in1998]

My personal opinion is that the main sections: 7702, 7702A, should be well known, but the sub-paragraphs seem unnecessary to memorize.

I could be totally wrong, but if they want to be that detaled about the IRS code, the would have made the appendices part of the reading. From the course of reading, it seems more important to understand the interpretation more than the actual law.

[Actuary_JB]

Based on the guidelines given to question-writers, the exam questions are NOT supposed to ask "obscure" questions, such as the one you mention related to specific section of the code for a particular calculation.

I would say you're better off knowing the general concepts and how they are applied than worrying about memorizing any specific section numbers.

JB

[rekrap]

:lol: TTIA in hindsight

[wat?]

:lol: TTIA in hindsight

:lol: I'm STILL haunted by this problem, 6 months later.

I looked at the problem during the read-through period and thought, "Hey, I remember commutation functions! This should be an advantage for me!"

:shake2: